Bill Text: NJ A4466 | 2018-2019 | Regular Session | Introduced
Bill Title: Provides small businesses with gross income tax or corporation business tax deduction for wages paid to minimum wage employees.
Spectrum: Partisan Bill (Republican 8-0)
Status: (Introduced - Dead) 2018-09-24 - Introduced, Referred to Assembly Labor Committee [A4466 Detail]
Download: New_Jersey-2018-A4466-Introduced.html
Sponsored by:
Assemblyman HAROLD "HAL" J. WIRTHS
District 24 (Morris, Sussex and Warren)
SYNOPSIS
Provides small businesses with gross income tax or corporation business tax deduction for wages paid to minimum wage employees.
CURRENT VERSION OF TEXT
As introduced.
An Act providing small businesses with a gross income tax or corporation business tax deduction for wages paid to minimum wage employees, supplementing chapter 3 of Title 54A of the New Jersey Statutes and P.L.1945, c.162 (C.54:10A-1 et seq.).
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. a. For taxable years beginning on or after January 1, 2019, but before January 1, 2029, a taxpayer that is a qualified employer shall be allowed to deduct from gross income the amount of wages paid to qualified employees during the taxable year.
b. As used in this section:
"Qualified employer" means a business entity, including all entities related by common ownership or control which has its principal place of business in the State, is independently owned and operated, and that had an average weekly number of full-time employees of not more than 100 employees during the calendar year ending in the business entity's taxable year.
"Qualified employee" means an employee of a qualified employer who is compensated in wages on an hourly basis, which wages are determined pursuant to the greater of the minimum hourly wage in effect pursuant to:
(1) the "New Jersey State Wage and Hour Law," P.L.1966, c.113 (C.34:11-56a et seq.); or
(2) paragraph 23 of Article I of the New Jersey Constitution.
"Wages" means direct monetary compensation for labor or services rendered by an employee, which amount is determined on an hourly basis, excluding any task, piece, or commission form of supplementary incentives and bonuses that are calculated independently of regular wages and paid in addition thereto, which are with respect to employment on a full-time basis in the ordinary course of business.
c. The deduction allowed pursuant to this section shall be allowed in addition any other exemptions, deductions, and credits that may be claimed by the taxpayer pursuant to the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq., including but not limited to ordinary and necessary business expenses.
d. A qualified employer that is classified as a partnership shall not be allowed a deduction pursuant to this section directly, but the amount of deduction of a taxpayer in respect of a distributive share of partnership income from the qualified employer pursuant to the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq., shall be determined by allocating to the taxpayer that proportion of the deduction acquired by the partnership that is equal to the taxpayer's share, whether or not distributed, of the total distributive of the partnership for its taxable year ending within or with the taxpayer's taxable year.
The deduction for a qualified employer that is a corporation that has made a valid election as a New Jersey S corporation pursuant to section 3 of P.L.1993, c.173 (C.54:10A-5.22) may be applied by the shareholders of the S corporation against the tax liability otherwise due pursuant to the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq., provided that the amount of deduction that may be used by a shareholder of the S corporation shall be determined by allocating to each shareholder of the S corporation that proportion of the tax deduction of the S corporation that is equal to the shareholder's proportionate share of the S corporation, whether or not distributed, of the total distributive income or gain of the S corporation for its privilege period ending with or within the shareholder's taxable year, and the deduction may be applied by the shareholders against the tax liability otherwise due pursuant to the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq.
2. a. For privilege periods beginning on or after January 1, 2019, but before January 1, 2029, a taxpayer that is a qualified employer shall be allowed to deduct from entire net income, or such portion thereof as may be allocable to this State as provided in section 6 of P.L.1945, c.162 (C.54:10A-6) plus such portion thereof as is specifically assigned to this State as provided in section 5 of P.L.1993, c.173 (C.54:10A-6.1), the amount of wages paid to qualified employees during the privilege period.
b. As used in this section:
"Qualified employer" means a business entity, including all entities related by common ownership or control which has its principal place of business in the State, is independently owned and operated, and that had an average weekly number of full-time employees of not more than 100 employees during the calendar year ending in the business entity's privilege period.
"Qualified employee" means an employee of a qualified employer who is compensated in wages on an hourly basis, which wages are determined pursuant to the greater of the minimum hourly wage in effect pursuant to:
(1) the "New Jersey State Wage and Hour Law," P.L.1966, c.113 (C.34:11-56a et seq.); or
(2) paragraph 23 of Article I of the New Jersey Constitution.
"Wages" means direct monetary compensation for labor or services rendered by an employee, which amount is determined on an hourly basis, excluding any task, piece, or commission form of supplementary incentives and bonuses that are calculated independently of regular wages and paid in addition thereto, which are with respect to employment on a full-time basis in the ordinary course of business.
c. The deduction allowed pursuant to this section shall be allowed in addition any other exemptions, deductions, and credits that may be claimed by the taxpayer pursuant to the "Corporation Business Tax Act (1945)," P.L.1945, c.162 (C.54:10A-1 et seq.), including but not limited to ordinary and necessary business expenses.
3. This act shall take effect immediately.
STATEMENT
This bill permits small business taxpayers to claim a gross income tax or corporation business tax deduction in the amount of wages paid to minimum wage employees of the small business in a tax year. This deduction is available for tax years beginning on or after January 1, 2019, but before January 1, 2029, and can be claimed by the small business in addition to any other available exemptions and deductions.
Generally, for purposes of calculating gross income tax or corporation business tax liability, businesses are permitted to exclude amounts paid as wages to certain employees, including minimum wage employees, as ordinary and necessary business expenses. The deduction permitted by this bill is allowed in addition to this ordinary and necessary business expense exclusion, as well as any other exemptions, deductions, and credits that may be claimed for the tax year.
To qualify for the deduction permitted by this bill, the small business taxpayer is required to be a "qualified employer," which is defined in the bill to mean a business (including all entities related by common ownership or control) that: (1) has its principal place of business in the State, (2) is independently owned and operated, and (3) had an average weekly number of full-time employees not greater than 100 employees during the calendar year. A qualified employer is permitted to deduct the amount of wages paid to the qualified employees of the business in the tax year; "qualified employee" is defined in the bill to mean an hourly-wage employee who receives minimum wage as set by State law.
If a qualified employer is classified as a partnership for State tax purposes or is a New Jersey S corporation, then the amount of the deduction may be claimed by each taxpayer on a pro rata basis according to the taxpayer's distributive share of income from the qualified employer.
